Good afternoon. Every so often the Mozambican government comes up with an unwise and controversial policy proposal, which eventually is abandoned once it accepts that it is a bad idea or when it fails to produce the desired results. Plans for the state to take over imports of wheat and rice look like they belong in this category (see below).
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The stated reason for the policy is fairly straightforward. The government is putting the blame on agricultural importers for the continuing shortage of foreign currency in Mozambique, especially US dollars. Importers, who pay for imports in dollars, are accused of over-invoicing for the imports when they get transfers from banks. They move the leftover dollars abroad to their foreign bank accounts and repay the full amount in meticais, as is normal. This way, they get to move money abroad, which they might think safer, and get around the shortage of foreign currency.
Under the policy put forward by the Ministry of the Economy, the Cereal Institute of Mozambique (ICM) will have sole control of wheat and rice imports. That does not inspire any confidence. It was the ICM which was formally responsible for imposing the illogical and industry-strangling quotas on pigeon pea exports, as part of a corrupt scheme to control the export trade for the benefit of the ruling party Frelimo and its friends in business. That scheme was no doubt directed by forces within Frelimo, but the ICM demonstrated that it can easily be made into a tool for corruption and market abuses.
